China will adopt a combination of fiscal and financial measures in an effort to boost domestic demand and bolster support for the real economy, according to the State Council's executive meeting chaired by Premier Li Keqiang on July 23, 2018.
The meeting decided that more companies will be eligible for preferential policies of additional deduction of R&D spending in taxable income, a policy that is expected to cut another 65 billion yuan in taxes this year, on top of an initial goal of cutting taxes and fees by 1.1 trillion yuan. Companies in the advanced manufacturing and modern service industries are expected to get 113 billion yuan in value-added tax rebates before the end of September 2018.
Solid implementation is urged of the re-lending policy targeting small businesses. Commercial banks will also be encouraged to issue financial bonds to these businesses with the bond issuers exempted from the requirement of continuous profit-making. Local authorities that have made visible progress in expanding financing guarantee and reducing costs for small businesses will be meaningfully rewarded.